ahead after house speaker's john boehner's plan b failed to make it to the house floor. and the northeast bracing for tough travel conditions ahead of the christmas holiday as winter storms, one called draco, dumps rain and snow from chicago to maine. it's friday, december 21st, 2012. about the end of the world theoretically or the first zombie, it could be, which could be the beginning of it. "squawk box" begins right now, maybe for the last time. ♪ it's the end of the world as we know it ♪ ♪ it's the end of the world as we know it and i feel fine ♪ >> good morning, everybody. it's great to be spending this last morning with all of you. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we are one step closer to the cliff and still no deal. you could say we've taken a huge step backwards at this point. we will be joined to talk about why plan b, that bill didn't

make it to the house and what the next step is. coming at 6:40 eastern time, red hat has been red hot. that company reporting quarterly results and we have the ceo. at 7:00 a.m. eastern time, we will welcome our guest host, roger altman and barry knapp. we have thorsten heins joining us, as well. >> our big story of the morning, it could be a tense days for the markets as the resolution to the physical cliff appears less likely. we can see the futures opening at least 150 off if things keep up the way they are. house speaker john boehner failing to mount enough support for his plan b that would raise taxes only on families earning more than $1 million. the president vowing he will press ahead with congress to get

a deal done. >> he wasn't going to do it, anyway. what does he mean it will press ahead? >> i don't know. >> because it wasn't going to go to the senate. >> but to me, the demonstration that boehner didn't have the support -- you thought boehner never had the support for this plan? >> no. i'm saying boehner didn't have support to do it even at a million -- >> which suggests to me what kind of rationale -- >> because maybe the house wanted some actually spending cuts. after giving in on tax breaks, they didn't go -- >> we always wondered if boehner can deliver the right. i wonder if the president can deliver the left. they're so much closer than the rest of the parties. >> why didn't you believe geithner when he slipped and said we're going -- why wouldn't the president? the president doesn't want to do 400. he was going to agree to that. he was going to do 250.

he gets 250 and above on january 1st. then he comes back and says we're going to lower for 98%. you guys have to say no to that or else we're really screwed. so.why wouldn't he do these? >> and then the democrats introduce the bill, here we go, now let's give the tax break to all the -- >> i understand the sort of political -- >> and it's always been that way. >> it's a cynical view of how this is supposed to go. >> he wouldn't accept the surrender. >> well, they weren't going to surrender. but if you know you're going to get killed, anyway, why wouldn't you surrender? >> the fact that you have two people, though, negotiate, each other that's basically unclear whether they have the ability to deliver at all means that this whole thing could be a >> you've heard mark andrews. let's go cliff diving, baby, i'm

really. and there are people that really do say the cliff is our version of austerity. sooner or later, we have to do it, anyway. let's see what happens, let's see what comes. we're lower rates for people, trying to minimize some of the damage, but i don't think the president ever really -- >> yeah. the people say market reaction will determine this. it's not down like -- >> how have we twisted this around as if it's the president as opposed to the fact that boehner comes -- i watched it on cnbc as the rest of the country did. it wasn't going nifr. he said he was going to veto it. it wasn't going to be taken care of by harry reed. why do you care what happens to it. >> because i think it's important to understand that does he even have the backing of the the conversation, anyway? it's like sending in a guy who should have coffee because it's

done. >> today is the day for the pins. >> we'll have team to rise above with our xaernt washington correspondents. good morning, john. were you up all night? >> not all night, but we stayed on, of course, until 9:00 after it was clear that the house alternative had collapsed. but, joe, i was listening to your conversation earlier. this is not about the far left and the far right. this is about the republican party not being able to get its act together and figuring out and strategy and pursuing a strategy. >> i watched the press conference yesterday. all the reporterses, all the mainstream media reporters were saying, mr. boehner, why are you going through this exercise? this is an exercise in futility. why are you doing this? why even hold the vote?

and then he can't do it and now all of you are going, see, see, you can't even do it. >> but it does raise questions about what this means for -- >> joe, it's not about the mainstream media. it's about the inability of this republican party to face the -- face political reality. the president was re-elected. his positions are much more popular where the country than theirs. they are locked into a caucus in the house which is not capable of being led by the speaker. he tried very hard -- >> not led to where the people that elected them didn't want them to go. >> yeah. well, look, the -- >> you know, 2010 was a historic election. you hardly lost any of those seats. >> what happens now? >> you lost the -- they lost the house, the senate and the presidency. >> they gained 70 seats in 2010

and the same guys are still there, elected for the same mandate for what it was back then. if these guys looked, and you heard boehner said the president has never really come to the table on spending. >> yeah, but that's not true. >> well, that's what you say. but they would say the opposite. >> well, no, joe -- >> why would these guys surrender to a deal that -- >> joe, that argument is empty. here is why the argument is empty. >> your argument is empty, john. >>. >>? >> no, no. >> you're just like the two sides that say neither side is compromising. every time you say it, i'll say it. >> no, joe, here is the difference. you're wrong. >> so are you. you're wrong. >> the president and the congress cut discretionary spending by a trillion dollars. >> token change. we've had people in -- there's a guy that did the auto bailout yesterday, harry wilson said it was a joke, sfending cuts. did you see steve forbes talk

about it? are they all wrong, john, just because they differ from what you believe? >> you're wrong. >> you're wrong four times plus one to infinity. >> no, no, joe, i'm sorry, joe -- >> your words are more inappropriate than mine. >> no. you're getting more full of it by the second. >> oh, please. >> why don't we do it this wie, john. based on the -- >> look, our spending problems -- hold on a second. hold on a second. >> when geithner said on our air we are fully ready to go, you must not have been listening. >> they are ready to go over the cliff. they're ready to go over the cliff. >> and get 250 above. >> the alternative is a set of policies that were rejected by the american people in the election and aren't consistent

with the reality of our governsance. >> to get 50% to raise taxes on 2% so that they can get 2% that they're raising? this is not a definitive -- >> no. come on. >> does john boehner lose his leadership position? does eric cantor have to come in? >> what's that? >> does john boehner lose his leadership position after this? >> i wouldn't bet on that at this point. it's not clear that anybody can effectively lead this caucus at this moment. the question is going to be does mitch mcconnell, who has been standing on the sidelines concerned by the inability of the house republicans to act, which he steps in and makes or permits a deal again reid and the president and republicans and the senate. >> john, walk us through the per mutations. >> the permutations are that the president, mitch mcconnell and harry reid negotiate a deal.

you get a certain slug of republican senators -- there is a by partisan majority in the senate. there's one in the house, as well, if it were allowed to work its will. but in the senate, you have the kind of deal that was negotiating. if they pass that with a large vote on the senate, the pressure with the speaker to allow a bipartisan vote would be very intense. so the question is going to be can they do that on the senate side? if they can't, we'll be left with a situation where taxes go up on everybody. then the administration will propose to shield people 250,000 and below. challenge republicans to oppose it and they'll have to figure out some way to turn off the automatic spending cuts sequester, counting on the fact that republicans don't want the defense cuts to take effect.

i'm glad you've known all along, jean. >> but what they will not do earn the sequester is go after the entitlement programs which republicans say they want to do. and the reason that the sequester was designed that way is that the entitlement program are extremely popular. >> right. everybody is -- okay. listen, how do you know all along the president didn't want to go to 250 above and come in, ride in on a horse after january 1st and save everyone at 98% below? it's going to work perfectly. >> that's clearly not the strategy that he preferred, but it's a strategy that he will accept. >> everybody hold your breath. one second, right now it's supposed to be the end of the world. >> ooh. ooh. >> we're still here. >> wow. that's the one benefit from the end of the world right there. maybe this is the first -- >> oh, my.

the first zombie might be somewhere waking up right now and walking towards "squawk box" right now. >> what movie are we looking at here? >> it's basically a documentary looking ahead to when your global warming finally comes next year or whenever you're predicting. this is -- >> squawk apocalypse. >> aren't all the different time zones -- maybe it's ending somewhere else. wouldn't it understand al at once? did the mayans mention gmt? did they know where greenwich was? i don't even think that you this knew -- somebody tweeted yesterday, if the mayans were right, thoeld still be along. >> do you think we made it through because we're on an earlier time zone?

>> is dave in the control room? does he know the answer? i don't know. we are not really sure, but we'll play alone. >> would he have survived so far, we think. >> we knew that's when it was supposed to be. >> but right now. >> unless we don't know it's happened. >> it's happening outside the building? >> i'm just saying, if a zombie apocalypse were to happen, it would start slowing and you wouldn't know right away. have you watched walking dead? >> i'm not a "walking dead" guy. >> i'm not surprised. >> i don't know what that means because i don't watch it. >> yeah, i know. breaking news, the end of the world has come and gone. becky and andrew didn't win the lottery. the end of the world didn't come. all the stuff we were sure was

going to happen. >> and the fiscal cliff. >> the fiscal cliff, we'll be all right. on january 2nd, there would be a bill to lower taxes on 98% of the country. the rich will be at 39.6%. it's going to work perfectly. it's going according to planned. anyway, according to the mayan calendar, 6:00 a.m. eastern time was the end of the world. we have some shots. let's look at hong kong. i don't think that's hong kong, but hong kong looks okay. it's still there. sydney, australia, is -- people are probably having some shrimp on the barbie or in fosters. there's the eiffel tower in paris. >> nice day out there. >> cafes r still there. geneva looks to be in pretty good shape, too. who is the other guy that said it was going to end? >> didn't he reset another date?

>> yeah. and that one came and went, too. and he's mad. he was wrong. >> that we're still here? >> yeah. did you -- like my kids didn't do their homework. >> oh, really? >> why would they? why would they do their homework yesterday? that's going to be a problem. >> you read all those stories about people doing the other guy, they got rid of all their requirements funds, took everything because they thought it was not coming. anyway, we're here. we're here. >> credit cards. >> did you even pay off those? >> no. i tweeted earlier today. take a look read now. they have gained a little bit. dow futures are still about 140 points below fair value. pooip people are looking to wall street to be some pressure for us to try and get a deal done. but this is not the reaction you saw after t.a.r.p.

>> those futures would be much worse, i would say, if the world had ended probably. oh, wait a minute. anyway, that would have been a much worse outcome .it's continuing, right, for the markets? i mean, we would never see the new york stock exchange and the i.c.e. wouldn't get together. we couldn't get that fine from ubs. >> how about the big options to live for? >> there may be some stuff. this may be the christmas week to be here. >> it may end up back here at some point. >> you really think so? >> we made it -- >> but i'm not sure. >> we mentioned where the fiscal cliff was only slightly below the end of the world in terms of seriousness, haven't we? and now that we've made it past that, we're going to focus. and then you have the debt ceiling. >> that would be funny. >> this whole thing gets pushed up to the debt ceiling. >> john can talk about this incredible ground swell in the country for everything that the

president wanted, even though we know what this coalition was sort of cobbled together. and we know there was a great campaign that he ran. >> i know. but the way we set these things up is you have to have a referendum on these things. >> but you need both houses. that's a law. and these guys are willing. they'll fall on the floor. >> i don't know that anybody could lead this caucus right now. the idea of boehner stepping down and somebody else stepping in, they're going to say, okay, we'll go along with you? >> let's say if we extend all the votes, we would have extended the fiscal cliff. it was weird to focus everything on that and not focus on tax entitlements. that's the leadership. >> but look, people say we need leadership.

i knew this would be the response and i think that would be the response. i think these guys are ready to not even be there two years from now. >> we will see what happens in two years. in the meantime, let's go across the pond where london is existing at the moment. >> we don't know yet, do we? >> i think so. kelly evans, we'll see if she's standing by. >> hello. we're here. happy to report that 11-11 was not tend of things for us. i want to draw your attention to an interesting story. we look to that country as a barometer for the rest of the west. so much of its debt has been held internally. overnight, we learned in the third quarter japanese debt hit a record. at the same time, japanese investors are buying polish debt, looking for better yields and, again, as we wonder about the vulnerability of this country with the highest debt load in the world, keep these important developments in mind.

you can see the nikkei down about 1% here. partly on some of the recall bragz of japan's outlook. but also, of course, on new about the fiscal cliff, sent stocks around the world tumbling. we should mention a lot of trading activity has diminished as people approach the first of the year. we saw after a significant weakening that it is rebounding today, but pretty much everything is. flows are going into the dollar as the safe haven trade. the euro/dollar down about a third of a percent. 1.32, still the level there. but back over to you guys. glad to see that we're all still standing. >> we are. and we came in prepared for the end. we came in prepared for the worst. >> kelly, you were ready to run or whatever it is to do. you look like you're in clothes where, you know, if you had to -- >> she has roller blades on. >> yeah. and you have a -- >> i'm with you guys.

i wore my heavy -- my boots are right there. >> i have canned goods under the desk. >> you can run in boots? >> oh, yes, you can. but kelly looks totally survival ready. >> i am. joe, i have stockpiled food under the desk just in case so i'm fully prepared. i think it's a smart strategy fog going forward, so maybe a track suit next week. >> maybe it wasn't base ten. >> they'll have the last laugh? >> i doubt whether the mayans knew diddley that long ago. but i'm feeling good. all the plans that we've been making, aim going to continue with. >> i'm with you. kelly, we'll be back. thank you. and the weather outside is frightful this morning. snow and rain across a good portion of the u.s. today. details on how it will affect your holiday travel, right after this.

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welcome back to "squawk box" this morning. winter storm draco dumping winter storms across the midwest. a lot of people getting on planes today. the weather channel's reynolds wolf. >> hey, guys. today is the big day and people will be going to the airports gore coo-coo for cocoa buffs. back in detroit, you have the snow to deal with. this is a mid system. and we have another system forming out towards the west we

have to keep watch on. one looefg the continent and another one coming on shore. in the northeast, it will be the big issue with the rain, the sleet, the snow and the wind. we will see issues in places like new york city, possibly as far south as raleigh. pretty easygoing. we'll be seeing the heavy rain in places like san francisco. oakland could have some backupes and perhaps some in portland and seattle. back to you guys. >> all right, reynolds wolf. got it. >> you know, you don't lose anybody if you go wolf reynolds. we have said that. >> reynolds, he also has carl. he wants him to be carl quinn. >> you do, really? >> you hear tr people who don't do it on purpose, though, reynolds. that's the thing. you're in on it. we're all in on this together. anyway, congratulations on still being here, reynolds, and maybe we'll see you next week. coming up, why share of

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we're back from the end of world. welcome back, everybody. u.s. equities at this hour are indicated lower, down about 150 points after the failure of plan b to make it through the house yesterday. that makes people think that some sort of a deal before the fiscal cliff is less likely before the end of the year. you would expect to see a sell-off in the markets. this is nothing like what we saw when the t.a.r.p. vote failed. you see the markets beginning to think, hey, we're not likely to see a vote by the end of the year. the s&p futures down by about 17 points, as well. blackberrymaker research in motion reporting a net loss, although revenue did top wall street estimates. shares yesterday down about 10% in the after hours trading as the company reported its first ever drop in subscribership. brian modoff joins us now to break down the numbers. when the numbers first came out, there was a bit of a pop to the stock before it plunged.

what was the concern, what was said on the conference call about subscribers or on how they're changing their fee structure going forward? >> it was what they said about how they're changing their fee structure going forward. previously, it was 36% revenues in the quarter. it's their most profitable part of their business. now they're saying those fee structures will go down market year. wouldn't quantify by how much, but the fact they're going down, that was one stable part of the business and now that's coming under question. as soon as they started to take a hit with that, the stock started to take a hit. >> why are they tinkering with this right now? >> they want to get it adopted and carriers are saying, part of the issue here is how much you charge us to carry your devices on our network. so they're trying to make it more appealing from that standpoint. >> is that an important long-term extent for them to take, getting it into the carrier's hands and getting it

out to the public? they've been losing their subscriber base. maybe this is an important long-term step in turning this around. >> well, the big thing is whether bb-10 is successful. to us, it's a pretty binary event. they want to go the app issue to make applications for the product. the service, while that's a negative, you know, the bigger issue is weather the bb-10 can be successful and that's big question mark at this point. >> how are we going to measure that? how long do they have once the device is actually in the hands of customers? >> i don't think they have that much time, frankly. obviously, microsoft has been trying to push their operating system for a while and they're still struggling. >> when you say this gets binary, if gets announced at the end of january. is it a month, is it two months? is it literally a week of reviews if walt mossberg doesn't

like it the game is over? how is the market going to think about this? >> if walt doesn't like it, that's an early indicator of how this thing is going. beyond that, what does the consumer think? how much support do the carriers give it? and what happened with the ad developers? one of the big things of kids, who are really the big buyers of these dwoiss is what can they do with it? one of the big limitations is blackberry is going to have is not much. when app developers make an app westbound first it's apple and then android. so getting those full apps on to the blackberry platform can be very important to them. if they can't get that, it will be a challenge. >> rim went from already $6 billion cash on hand to $2.9 million. can you explain what that means? >> essentially, they did things to free up assetes and put them into cash.

lower amount of channel inventory. really, what they're getting ready for and then the other thing that hit them on it is the fact that they planned to significantly increase marketing and sales this quarter in front of the launch. so they had to get ready for that. they have to now build new product, get it into the channel. and that cash you'll see come back down again as they manage that process. >> okay on. brian, thank you very much for joining us today. appreciate your time. >> you're welcome. by the way, folks, we'll be talking talking to thorsten heins. now joining us is democratic congressman steven lynch and republican congressman michael burgess from texas. i'm going to start in washington. is there a way forward at this point? >> i think there is. we just have to stay at it. now, congress is now recessed until after christmas, which is disappointing. but we have to get to a point

where we have offer and counteroffer so that we can count heads and figure out when and on what basis we will get consensus here. that's troubling that the speaker was not able to convince his own members to support his plan, plan b. >> i don't want to get too political. i just want to try to see if we can, in the next five minutes while we're on the set, figure out a way to actually move forward. in terms of going through the permutations, what's the next step if there is one at all pre-christmas? >> well, i think what we'll have to do is figure out what level, whether it's above 250,000 or i've also heard numbers back and forth 400,000 where the tax cuts would actually go away. now, the problem is that so many of my republican colleagues have taken a pledge not to let that happen. and so that is difficult. what we'll have to do is figure out where that line is that will give us 218 votes to get this

passed through the house. and that's going to require from back and forth. >> congressman burgess, where is that line? >> i don't know. the interesting thing is, this whole scenario is a result -- it's the president's making. a bill he signed two years ago to extend the bush tax cuts two years to expire december 31st and a bill he signed in august 2011 that created the sequester. this is all occurring at the president's hand. >> wa about boehner's hand? i watched the same press conference i imagine you watched. i saw boehner come out, say that he had a plan b. sounded as if he thought that his party was behind him and apparently they were not. >> well, there is a process difficulty. you go down to a room at the white house and negotiate these things without the congress there. and leaving the legislative branch out of the equation and it's sometimes hard to make that work. there have been leaders and whips in the past who have been able to. but this week, it wasn't to be

so. >> should he be the speaker? >> well, he is the speaker. that's not a negotiable point. he is the speaker. >> the same thing happened on the t.a.r.p., though. nancy pelosi was not able to get her caucus together, too. >> does it say more about boehner or does it say more about your party, sir? >> no. i think it says more about the president. the absolute invisibility about the president these last two weeks when this was going on. >> can you jump in here? >> the president has the obligation to work with the congress. he certainly hasn't been to our caucus. >> with all due respect, we have had communications with the president. the president does have a consensus around his proposal. he does have a consensus from 250,000 and above. he also may have enough votes for 400,000 and above. he's got the consensus and the ideas. he just doesn't have the votes. mr. boehner has got the majority, but he can't get his members to support his own

proposal. so the president and the democrats are much further along in this towards a compromise than my colleagues on the other side of the aisle, with all due respect to my friends from texas. >> well, in fact, the problem is not solved, mr. lynch, and you know that very well. harry reid has a bill over in the senate that had the house passed at the end of august to extend the current tax policy for an additional year. he could take that up and pass it very quickly. that's kicking the can down the road. >> on january 1st, if taxes go up on everyone, is there a clear consensus where everyone comes in and says, we have to do something to lower taxes on some portion of the population? >> the fact of the matter is, the obama care taxes kick in that day, too. there will be a shock to the system in the american economy because of the policies the president has pursued. remember, these are all things he has signed into law. >> real quick before you guys go, congressman burgess, are you going on vacation? >> hell no, absolutely not.

we're told to be expected to be back here within 48 hours of the speaker's call. if i can get a flight home, i'm go to texas for a day or two, but that's it. >> congressman lynch? >> we should not be recessing. we should stay here and work. >> are you staying there? >> i live in boston. i can be here in two hours. as soon as the speaker reconvenes the session, i'm here. i'm willing to stay. >> i'm going to wish both of you gentlemen a happy holidays. i do hope it is a happy holidays and we get through this. thank you for being here this morning. >> thank you, as well. >> we'll get through it. >> it's the end of the world, we got through that. we can get through this. coming up, shares of open sore software. red hat is the name of it. getting a pop after the bell. pops and drops. it was up after the bell and better than expected revenue. we're going to talk to jim whitehurst, next. ♪

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welcome back, everybody. if you are just waking up, the end of the world has come and gone and we are still here. dow futures are indicated sharply down, weaker by about 142 point. that's coming after boehner's plan b was never brought to the floor because they didn't have the votes. that has a lot of people thinking that it is going to be much more complicated to get any sort of deal by the end of the year. you see some reflection in the markets, certainly not the reaction that we saw after the t.a.r.p. vote failed when the market was down by about 800 points. still a drop better than 1% for all the major indices. >> it will be a fascinating day to drop.

when futures are that weak, sometimes it opens there and sells off and it gets ugly. but if it were to open right there and close right there, we will still be at 13,150. >> you think about the big gain overs the markets. we're back to where we were on november 5th or whatever. it's a monday. so we're back there and, you know, we never know. we could be down. who knows. the day of the t.a.r.p. it went down. >> particularly when you get into these days of light trading. >> and all these guys are going home. did you hear this? >> are you going to boston? >> there's an airport -- you know -- are you going home? there's ways to get back. i'm not really going to say i'm going home. >> they're coming back on the 26th. that's the expectation. >> i can get back. >> but are you going home? >> i have a plan. anyway, open source software company red hat topping expectations for the company. the company announcing it will

buy an enterprise cloud management start-up. i think we saw -- i think we brought up a chart, things are -- for all the worries that we have, you're just moving along, business as usual. it's a $52 stock headed to about $57, right, today? >> well, we had quite a strong quarter and it's part of a string of quarters over the last two years where we consistently delivered double digit earning eggs growth. which is a rare thing these days. >> and i want to take a look at a longer term chart. in the midst of all this in europe and everywhere else, that is a chart that a lot of people would be envious of. jim, we can't neglect what's happening today in washington. has it affected you at all? have you made any plans? are you doing anything based on what these publioliticians are wrangling' about? >> certainly, it's slowed our

growth. >> it has? >> in the couple of years, it's slowed even faster. government was weaker than normal for the quarter and i think we'll see that going forward a bit. it's hurting for us. we have a lot of cash, we have no debt. so it's not a major, major impact. certainly the lack of clarity is hurting our customers and that ultimately affects us, as well. >> so you do business with the government and also the uncertainty around the policy has affected some of your customers to some extend? >> oh, absolutely. now, we sell a high valued proposition, so we do well in downed markets. so at the same time it's hurt us with some government customers. overall, the lack of certainty has led people to want to save money. so that's also helped us. at least for us, we're not not the leading indicator generally on technology. >> you've been able to do this despite international clients

dealing with all of their problems, as well, right? >> but, again, if you look at southern europe for us, companies have struggled to save money. they often come to us. so our value proposition sells really well in a downed market. >> that's pretty amazing. well, the most stand out -- the upside surprise in the stuff you just said was, what, margins, revenue, sales? what was it? >> it was really on the revenue side. we've been investing heavily over the last year. we've made three acquisitions in this calendar year. and so margins have been a bit muted. it's been revenue growth. we've consistent lly grown at 2 plus percent. that's a rare thing to find organic growth rates that high. again, we outperformed this quarter on revenue. that's continued to propel us forward. >> i don't want to buy anything from you, do i? is there anything that i could buy that could help me out

individually for red hat? >> not directly. if you do equity trades, the new york stock exchange and most major exchanges run on -- if you go and buy an airline ticket, you're probably using a system run by red hat. so we are behind almost anything you use on the internet every day. be, yeah, you wouldn't directly want to buy from us. >> what's the cheapest thing you have? if you wanted something that said red hat, would you send it to me? would it be a disk or something? what the hell would it be? >> we're happy to send you a red hat if you want one of those. if you want to buy something from us, i think the cheapest thing we could do would be a developer workstation for about the 300 bucks. >> maybe we'll split it. >> what are we going to do? >> develop things. >> there you go, joe, you could write an iphone app. i'd love to see that. >> fantastic. it's a deal. it's a deal. >> done. we'll get you a copy. >> and i don't care what happens on january 1st, we're buying

this thing. jim, we appreciate your time today. stock looks good. appreciate it. coming up, it can be a last-minute gift idea if you saw the squawk app development that we're going to build during the commercial break. hickory farms is a long standing tradition in many households. we'll talk to the company's ceo right after this. [ penélope ] i found the best cafe in the world.

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welcome back to "squawk box." it is the gift that keeps on giving. tasty snacks from hickory farms. joining us is hickory farms ceo mark rodriguez. mark, i will admit i am one of those people who grew up, you have a lot of nostalgia for hickory farms. in our house it was a really big deal when we got it at the christmas holidays. where do you sell more? in the malls? in the stores? or online? >> we have 750 kiosks throughout shopping malls in north america and that's our primary route to market. although we have a booming business in the online channel, and we also sell through a lot of traditional retailers, it's really the kiosks, the heart of the company. >> how have things been going so far this year? how would you gauge the consumer strength just based on what you're seeing? >> consumers are cautious. i mean, similar to what you've been reporting, consumers are cautious. we saw a -- an increased percentage of business being done in the black friday through cyber monday weekend. and we also are seeing a late surge. so we believe, we're very

optimistic for this weekend. we think they're coming late and they're going to come in masses. so we're feeling good about this. >> are they waiting for sales at the end of the very last few days before the holiday season? and are you offering any? >> some are waiting for sales. we will be offering modest sales probably at the end of the weekend. not in the beginning. we are fully stocked and loaded so we're really hoping to get our assortment we'll deliver on the expectations that consumers are going to buy. but some others may. may, in fact. but really, i think, people have just been really busy and been preoccupied with a lot of things that they procrastinate a little bit. we do have the extra three days versus a year ago. i think they'll be coming. >> you think the fiscal cliff talks weigh on the minds of consumers? or is it too difficult to tell? >> the research would indicate that there say prnlg of americans that are concerned about the cliff. i think in our market, which is really middle america, it's not as pronounced as it is at some of the primarily the higher end of the market. >> what is in the box that we're looking at over here?

>> that's one of our greatest gifts. it is called our family and friends gift box. it is a gift that is dedicated to raising not only to providing a tremendous experience for american families, but also for raising money for share of strength, no kid hungry campaign. and it would cost about $45. it is for every box that we sell we donate $5 to no kid hungry and it's enabled us to raise $2 million over the last few seasons to fight childhood hunger in american. >> that's sausage? >> sausage, cheese, crackers, there's some nuts. >> not the turkey sausage? i saw that we're supposed to ask you about some healthy stuff. that's the regular sausage. >> you can ask me about healthy stuff. we're doing that, too. >> it's primarily beef sausage. >> you need some of the beef summer sausage. none of that turkey. >> is there a big health kick, do you think, going on? >> there's two ends of the market that are growing. there's definitely people more concerned about their health. but indulgent side of the market is also growing.

and when you think about the holidays it's really a time when people indulge a bit. and hickory farms dates back to family memories. really precious, moments that families shared around their tree, at their table, and so we're all about nostalgia. nostalgia. we've spent a lot of time and energy improving our products, the experience that we deliver is better than it's ever been before. >> why is it such a nostalgic -- i know why, knotts agoic in my house, too, but was there something about the brand that you created? it's like a throwback to the brand in terms of the way people think about it. why is that? >> well, it's all about -- >> and then how do you position it now? >> we're all about nostalgia. if you think about our brand and what we try to deliver, it is recreating that experience, in your home, around that table, when you were 7, 9, 13, it doesn't matter. what many people tell us in research is christmas doesn't start until that first box of hickory farms is opened. so it just taps in to that psyche of really precious times. that's our connection with

consumers. >> a lot of nostalgia. country is changing. with your help it's a country different now than it was long ago. so we're going to have -- you know what i'm going to have with it? 32-ounce sugar soda with some of that sausage, and i'm going to have it all. what do you think? >> it's the holidays. >> i'm going to make you some, too. >> mark, thank you very much for coming in. >> thank you for having me. >> coming up, evercore partners chairman roger altman and barclays barry knapp will join us to talk taxes, spending and the fiscal cliff. >> and gary knute. it's a new day.

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the fiscal cliff looming larger. >> pursuant to clause 12-a, the house will stand in recess. >> the speaker's plan "b" bill

fails to generate enough support to make it to the house floor. reaction from ever core partners roger altman and barclays barry knapp. >> looking into the future of smart phones. what research in motion's chief has in mind. >> and the state of the consumer. some last-minute gift ideas from brookstone ceo. the second hour of "squawk box" begins right now. >> >> good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. if you are just getting up you're in for a little bit of a surprise. the dow futures down by 138 points below fair value after we saw plan "b," boehner's plan, they decided not to bring it to the floor at all because toy didn't have the votes for it. that has a lot of people thinking we are much less likely to get any sort of a deal before the end of the year.

the indices across the board are down by better than 1% below fair value. it's not the kind of drop that you saw after the t.a.r.p. vote was brought. that was a drop of 800 points but this does indicate that there is some concern out there about whether or not we'll get a solution to the fiscal cliff. sharing their thoughts we have barry snap of barclays, also rornlger altman of evercore partners. they're going to talk to us about all these things. we do have a lot to talk about. before we get to that let's tell you a few of the other morning headlines. the fiscal cliff looming closer. that attempt by john boehner to pass the so-called plan "b" tax bill has failed. the measure which could have kept current tax rates for those making less than $1 million a year failed to gain enough gop support to bring it to the floor. they're going to be leaving for the next several days. general electric is buying the aviation business of italy's avio for $4.3 billion. ge is trying to expand its participation in the jet propulsion market.

they were once owned by fiat and is now controlled by a european private equity firm and research in motion reported a smaller than expected also for its latest quarter. the stock is under pressure as the company saw its first-ever drop in its subscriber rolls and said it would be changing its fee structure. that is something that brings in more than a third of the nephew. it's been seen as the one real stable piece of that business. we do have the ceo thorsten heins. he'll be joining us in just about 30 minutes to talk more about this. >> there's only ten days left now to prevent automatic tack hikes and spending cuts. joining us from washington, republican congresswoman shelly moore capito. were you privy to everything that was happening yesterday? >> i was shocked when we went into the conference at 7:45 and the speaker, after offering this serenity prayer, said merry christmas, you're going home, we're not putting the vote up, we don't have the votes. i was disappointed, quite frankly. >> really? is it overstating it to say that, you know, some people

characterize it that the president was not accepting the surrender of the gop anyway, so why not keep fighting? >> we needed to strengthen the speaker's hand in negotiations and i think by saying and reiterating that we didn't want taxes to go up by 98.1% of the population i think is a strong statement for us to go. we had -- would be moving one of the rates, and i think that that was a concession on our maert and i was disappointed we weren't able to send that over to the senate and say to them, all right. your turn. >> yeah, i know. but all these games. everybody knew the senate wouldn't take it up. the president promised he would veto it so you would have symbolically done something. >> i'm not sure the senate wouldn't have taken it up. if you take it up in that fashion but i think we would have -- >> they might have amended it or something? >> sure. >> let's say we go over on january 1st for argument's sake, rates go up to everyone, then we get a bill to lower the rate on

98%, would you support that? >> what's that? that is i believe the 250 threshold, although i'm not exactly certain. i think it's interesting that that's the terminology that the president has desited to go with because he's really now still, he's already said 400. where is he on this? and i think, you know, i have to look at what the specific number is. i don't know who that includes? >> if you can't get a million done why should we think that there's any possibility of a deal with the guys that are really have their feet set in stone? what would the president have to do on the spending side to get them to even agree on a million? >> the president would have to get specific on spending, and he would have to be serious about it. and that was one of the holdups of this bill. the president has not come forward with a way to convince us, and convince republicans, that he's serious about cutting spending. he's come forward with more infrastructure money. you know, there's just not enough money for him to spend. i think if he's serious on that,

then you would see more movement. but at the same time, i think we've weakened the speaker's hand and he may have to look to the other side of the aisle for the votes to pass something like that. >> congresswoman, is speaker boehner the man for the job? >> i believe he is. i think that it's a tough position that he's in. you know, we only have, you know, the house. we don't have the senate. and the president was dealt a strong hand -- >> people talk about leadership and it's one thing to go on tv two days ago and say here's our plan "b," this is what we're doing, everybody saw it, and then, be here where we are on a friday morning, ahead of christmas, in a completely different place. >> well, you know, he's got to be severely disappointed. i am, too. i'm not sure what -- >> was there misdirection inside the party? were there people who said they were giving him support that then turned on him? did he make assumptions that didn't make sense? how did we get here? >> you know, i'm not really sure. i do believe that some of the groups that oppose this came out very forcefully, and quite frankly, i think some of the

people in our caucus are so afraid of primaries that they won't move forward and do the right thing. and i think maybe the speaker miscalculated the will of members of our congress to be able to give him a hand in the negotiations. right now, when he says, senator reid and the president now have to work this out, what does that tell you? he's basically telling you, i don't have a strong enough hand to go in to this, because you all wouldn't come with me. >> right. >> and i'm disappointed. >> what are the chances that the guys that weren't going to go along with the speaker are going to go along with anything that the president is proposing between now and january 1st? any deal that the president puts together with reid or whomever. i mean, would you -- what are the chances now that we don't get a compromise by january 1st, in your view? >> okay. it's dimmer. but i do believe we are coming back after christmas, and so i'm going to keep my little optimistic tone that i've tried to have to say that we can still get a deal. but the president has got to be

serious about spending. he's got to be serious about looking at these entitlements so that we can -- you know, so that we can be serious about the tax revenue portion. >> it needs to pass the house, though? doesn't it need to pass the house, congresswoman? it's not going to pass the house -- i can't imagine the president coming around to where it could satisfy these guys. >> well, you know, what remains to be seen. i think there's enough people that don't want to see us go off this fiscal cliff that we will keep pushing forward, and try to get people the certainty that they want. these -- the bill that we should have voted on last night had permanent tax relief for 99.81% of the people in this country. i would have supported, and i can still, you know, support that. but maybe we can pick up more people with spending cuts, more serious entitlement reforms. the president's got to look at that seriously. i hope he doesn't want to go off this cliff because i certainly don't. >> he could go off for a week. i don't know. no one really --

>> i don't think anyone really looks at the way it would -- if the president really wants to get to 50. he doesn't even need to compromise at 400. it goes right back to 250. all the rates get back to where he wants them to be and then you lower the 98%. all along it seemed like that was the best strategy for him, didn't it? >> and then the president has all of this revenue with no certainty of spending cuts, with no way of reining in government. i think that is wildly in opposition to what the general public want. >> we're hearing there's a mandate -- >> you don't think there's a mandate to cut spending? >> i think that we're hearing the other side thinks that they definitely have a mandate to raise taxes on the rich. and that's really all we've been talking about for the past two months, right? i mean, the republicans have let that be the defining issue of what we're talking about. they tried as much as they could, but you know, he's got the bully pulpit. >> right. and i agree, that's been very,

very difficult, and that's been a mistake. we've been talking about it. we've already passed permanent tax, keep the code the way it is. we've already passed spending cuts. you're right. we can't get through. but some folks in our caucus don't realize we don't have the heavy hand of the presidency. the president does. and he won this election. and that's making it more difficult. >> right. all right. appreciate your honesty today. >> thank you. >> congresswoman, thanks. let's look at what the next step might be to solve the fiscal cliff. we kick off this hour with roger altman, chairman and founder of evercore partners and deputy treasury secretary under president clinton, barry knapp, head of u.s. equity portfolio strategies at barclays. barry i need to get to you in a second for the market reaction, because it's still going to be above 13,000 if it were to open here and not sell off all day long. roger, have you talked to any administration officials in the last 12 hours to get an idea of what is likely now? >> not since last night. >> what do you think is likely? do you think we're going over?

>> first of all, i thought congresswoman capito's assessment was quite an indictment of the situation on the republican side. she was pretty candid. >> uh-huh. >> and she obviously described a situation which is in disarray. it's hard to imagine, joe, a tougher moment. >> all right. >> for speaker boehner, a more shocking defeat and so forth. >> the white house would not have taken that deal. so if they -- they can't even get that deal agreed to, which we know the white house wouldn't have taken, it just seems like they're much further apart than we thought on monday or tuesday. >> i think what will happen now, is that the leverage and the initiative shifts back to the president. i would imagine, i don't know this, i would imagine that he and the senate leadership would work out a revenue and spending, deficit reduction bill, pass it in the senate over the next few days, before the deadline. >> right. >> and then that will put tremendous pressure on the house to either pass that, or put the

country over the fiscal cliff. and there will be tremendous pressure from the financial markets, there will be tremendous pressure from the public. >> right. >> now, perhaps it's necessary to go over the cliff, for the republicans in the house side to be able to vote only on tax cuts. >> right. >> rather than a bill like the plan "b" which would have raised taxes on some americans. and one of the obvious miscalculations that the speaker made was, let's pass a bill which is just on a party line basis. just with republican vote. by doing that he put himself in a position where he could only lose two dozen republicans, or the bill would fail, and it's pretty hard for any party to get every single one of its members on anything. >> right. >> to vote on a party line basis, and so he lost more than two dozen republicans, and they pulled the bill because they didn't have the votes. that was a very difficult high wire act to try. and it flopped. >> you think some of these same guys that wouldn't go along with them, if we went over, would they vote to afterwards since it's a tax cut then, even though

it stays at 250, they'd lower it for everyone else, because it's a tax cut, they would be allowed, they would do it at that point? >> based on some of the commentary that we all saw after the bill was pulled, it would seem that the problem was on the far right side. >> right. >> of the house republican caucus, and that in turn the problem specifically was, raising tax rates on anybody at all. >> right. >> remember, he had to -- he could only lose, as i said, about 24 votes, and so if you just had 24 members of his caucus who said i'm not raising tax rates on anybody, the bill failed. so, -- and the issue now with a bill that president and senate leadership work out, and that goes back over to the house before the deadline, will be whether or not the house is prepared to vote on a bipartisan basis. and whether or not, say, 120 republicans in the house side, together with about 100 democrats, can come together and pass something. in other words, a bipartisan approach instead of a party line approach. >> was the market really going

to take this bad today, or in stride? >> it should do. i thought the market was in the wrong place for getting plan "b" passed. i thought the market was vulnerable on the downside. so not getting it passed, and having nothing, is worse still, look i thought there was significant downside under a best case scenario. and now obviously under a worst case scenario. >> you're worried more than 150 points? >> yeah, between now and when we finally get something done, sure. i think we should be at 1325 or 1300 on the s&p. that was my year-end target all along. >> we're going to talk more about that. if you've got comments, questions, about anything you see on "squawk," shoot us an e-mail, you can also follow us on twitter. still to come this morning, the ceo of research in motion, he's going to join us to discuss the company's quarterly results. and its plans to remain competitive in the smart phone arena. up next, from massage chairs to remote controlled helicopters, brookstone has a gift for everyone. the ceo joins us to talk

business. the holiday season, and last-minute ideas. right after the break.

take another look at the futures. again we are down by about 136 points below fair value for the dow futures. s&p futures down by almost 15 points. again this is all because plan "b," boehner's plan "b," was not even brought to the floor of the house because they didn't have enough republican votes to

actually get that passed. that has a lot of people concerned about what happens. and whether or not there's really going to be a deal before the end of the year. we should tell you that speaker boehner at this point is now saying he will have a press conference coming up at 10:00 a.m. eastern time. so maybe we'll hear the next step at that point. >> okay. >> i wonder if he heard from everyone. >> we'll find out. >> in the meantime we are heading into the last shopping weekend before christmas, and stephen bebis is the ceo of brookstone and joins us now on how the holiday season has been shaping up. good morning to you. >> good morning. >> before we get into the holiday season, i need to admit something. i am the guy who sits in those chairs in the airport, you know how you have them in your -- in your store? >> yeah. >> and the massage chairs. and i wonder, do you sell those chairs? i know they're for sale. but how many of those chairs do you sell in a given year? >> we actually sell thousands of those chairs. it's one of our strongest items in our stores. our sales are up over 20% in

shares this year alone. >> but you were mad when it just stopped and you were like, this is a mis -- i thought there was more. >> no. i get mad when the brookstone guy comes over and says you've been sitting in that chair for probably too long. and i haven't bought anything yet. >> well, we like you trying the chairs. we like to demonstrate those chairs. because once you sit in a brookstone chair, you're going to want one. they're fantastic. >> for not falling asleep. we've been talking about the fiscal cliff all morning. we haven't really seen it impact the consumer yet, and i'm curious to know from your standpoint in the past couple weeks, have you seen it? >> well, we had a really great black friday weekend. sales were very strong. our cyber monday, we had four times the traffic we've had in the past. we've had a really good start. it eased up a bit in the first couple of weeks of december. but it's picked up recently and

we're expecting a real strong, good weekend. >> so the fiscal cliff thing, you're not attributing this to the fiscal cliff. we're just attributing this to perhaps the new way that consumers are shopping for the holidays? >> well, we've noticed over the past few years that people are more selective. yes, they are. they're looking for quality. they're looking for value. and brook stone products improve the quality of life. so we're a great place to shop during stressful times. >> okay, tease us real quick. just give us a couple of the top three products of the year right now. because i love all these gadgets and crazy things you guys sell. >> well, the top three items we have is the hdmi projector. you can plug it into your iphone, tablet, any gaming device, it's wireless, so you don't need to plug it in. you can actually watch a full-length movie on the wall. it's with a 50 inch image. >> like a movie on my ipad -- >> it's $129. >> very cool. >> we have the wine aerator.

it was tested by the beverage tasting institute of wines that were aerated with the brookstone unit -- >> if i have a really good bottle do i use this on that? >> you do. >> yes. all kinds of wine. reduces tannins. adds fruitiness. makes it smoother. and you put it right on the bottle so you don't have to aerate the wine. >> going to ask you about, i think you're not being totally honest. what's the third? i'm sorry? >> what's the third? because i know why i go to brookstone. but what was the third best-selling thing. >> the third-best selling is the max two dual massager. >> no. where's the ear and nose clipper. >> the nose clipper. >> has there been any technological advances in recent years, stephen, on those? and you do -- that's one of your best products, you've got to admit. >> it's a great product for brookstone. >> is it not something the guys like -- >> i'm just amused by we've gone from the fiscal cliff to the nose clipper pretty quickly. but -- >> you have a lot of different

models, stephen. do you not keep those in inventory? are those not very important products for you? >> stephen may have me on the nose clintoners. >> you need -- >> my wife is watching -- >> a stocking stuffer here. >> there's nothing worse if you pull them out you're going to get like encephalitis or -- >> it's early in the morning for this conversation. >> but it's the best product. >> we're very proud of our nose clipper we have a new one coming out next year that's amazing. >> a new one? >> brand new, improved. >> okay. >> because mine has a little light, too. >> for the dark tunnel. >> if you don't use it, it's like a party favor -- >> we wish you a very happy holidays. when you do have the new nose clipper out we'll have to have you back. i would suggest a demonstration on the air with joe but maybe that's a little too much. >> we'll have to send you one, for sure. >> okay. thanks very much, happy holidays. >> thank you. >> when you age, you lose it where you need it, and then it starts growing everywhere else where you don't want it.

>> how's your back feeling? >> i have none on my back. >> no. >> good there. >> becky? >> how's your back? >> my back is fine, thank you. if there's anything else you're 40e7ing to hear us. follow us on twitter. i'll give you all the details we talk about during the break. when we come back, a super yacht impounded. details after the broke. and then the ceo of blackberry maker research in motion is looking to connect with investors. he is joining "squawk" at the bottom of the hour in a first on cnbc interview find out how he is feeling about the business and the smart phone market. big questions, blackberry 10, what's going to happen with that? we've had analysts telling us that this is a binary event. that thing goes well the stock is in great news. if not, look out below. i always wait until the last minute.

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this computer-animated coffee tastes dreadful. geico. 15 minutes could save you 15 % or more on car insurance. someone get me a latte will ya, please? welcome back, everybody. a superyacht built for apple's late co-founder steve jobs has been impounded in amsterdam because of a dispute over the unpaid bill to designer philippe stark. jobs never got to use the yacht but he commissioned the designer to work on the vessel which cost more than 100 million euros to build. a lawyer representing stark's company told him his client had received 6 million euros out of a 9 million euro commission for his work and was seeking to recover the rest of what he was

owed. that yacht was impounded and will remain in amsterdam in that port there pending payment by lawyers representing jobs' estate. >> you know what? i got to tell you, i had a dinner, we were talking about this a month and a half ago. >> i remember you telling me about that. >> still to come this morning, the "squawk box" trading block is going to get you ready for the trading day ahead. the top of the hour, we've also got former council of economic advisers austan goolsbee. he's going to join us. "squawk" is coming right back. >> up next, blackberry's ceo thorsten heins on the company's quarterly results, and the future of blackberry. it's an interview you can't afford to miss. and it's right here on "squawk box." >> move over sleeping cat videos, this will be the year of professional videos.

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welcome back to "squawk box" this morning. in the headlines this morning, we're looking at a sharply lower open for u.s. stocks this

morning. this after house speaker john boehner's so-called plan "b" tax bill failed to make it to the house floor for a vote last evening. the bill was pulled after failing to garner enough republican support. it would have kept current tax rates in place for those earning less than $1 million per year. speaker boehner planning to hold a news conference this morning at 10:00 a.m. eastern time. we do not know what he's going to say but obviously a lot of people going to be watching that. facebook's instagram unit has reverted back to its prior privacy policy after a change convinced many users that it gave instagram the right to sell their photos and use them in ads. had a lot of people concerned. instagram said that was not true but has changed the language back to the old language. but facebook may have started another controversy. it's now testing a fee. joe you might actually like this. it's testing a fee for messages sent to people who aren't facebook friends. if they're not your friends you pay to send them a message. facebook is testing that fee for only a small number of users.

messages to nonfriends don't show up in their inboxes if they've selected the option to exclude such messages. so if people want to send you a note they pay a fee. >> to outlook -- >> no, no, not to outlook, if you have a facebook. >> you'll see that none of this -- it's not in my realm. i don't know. >> for new year's. >> they're going to make us get facebook, aren't they? >> they may. >> social media are going to make us. >> are you on? >> i'm not at this point? >> are you on facebook? >> no. >> and we have a big show page. >> i'm with roger. >> "squawk" has a fudge show page on facebook. >> "squawk" is fine. >> we've got to get you on personally. in the meantime, barry knapp. you had started, we didn't really get to finish this conversation, giving us a relatively dour impression of where the market may end up over the next week given where we are in the fiscal cliff. >> yeah. for me it's not just next week, it's the first major move of 2013. i think the markets all along have been overly sanguine about

the implications of this. even under a compromised deal the president has given up on extending the payroll tax cuts. there's $120 billion in fiscal drag right there. the top marginal tax rate goes up, small business tax hike. you saw what happened to the nfib small business survey last month. so there is significant macro economic fallout on this, at a point where the real disposable income growth is at its lowest level, its lowest level during the whole recovery period. the savings rate's gotten drawn down fairly significantly. earnings estimates for retail or media, all of those things, are really elevated. so there's a whole level of vulnerability here, even under a fairly benign outcome to this. now, obviously, if the outcome is worse, then the downside gets even more significant. you don't have a downbeat assessment for all 2013, we think by midyear some of the uncertainty starts to clear up, capital investment will recover and we'll have a better cap. but we think the market's totally not been fixated on the

timing of this deal, and not the contours of the deal and the implications of the deal. >> i know we never like to advocate market timing for investors in the world. however there's a lot of people who watch this show and other people in the world who think that they can market down. over the next week or two, is this the time to do a little dipping in the water if you're not dipping right now? >> you mean to buy -- >> to buy? >> it depends on the magnitude of it. if we get down to 1325 or 1300 or so on the s&p then yes, we would suggest buying capital spending sensitive parts of the market like technology, enterprise technology, or the industrial machinery names because we do think capital spending will recover over the course of the year. we would not be buying the consumer discretionary sector. we would not be buying the financial. but there is, you know, there has been a fairly significant -- there's been significant implications of how weak capital spending has been to this point. but not at 1400. or 1420. the market's just not in the right place for the fiscal drag

that's almost written into the cards already, let alone a much worse outcome. it's clearly a possibility. >> we're going to continue this conversation with barry knapp and roger altman who are our guest hosts today. we have a lot to talk about the fiscal cliff. but we have another big newsmaker. blackberrymaker research in motion reporting a smaller than expected loss. investors are worried about a falling subscriber number. also a change in the revenue model. that was probably the big issue that caused that stock to drop about 10% last night. cn cnbc's john ford joins us now with a very special guest. john? >> thanks, becky. thorsten heins, thanks for joining us this morning. congratulations on outperforming a lot of expectations on the quarter that you reported. a couple of areas, though, i want to ask about. one is service revenue. another is blackberry pen devices. starting with service revenue, because that's now about a third of overall revenue, three quarters of gross profit by some estimates. what's going to happen to

service revenue as we transition to blackberry 10? a lot of concerns that carriers are not going to pay full rate on service for consumers because they're not going to get the full enterprise security package. they don't want that full package. should we expect consumer service revenue to fall by say, half, going forward? >> so, good morning. first. and thanks for that question, because i think there is some clarification needed here. first of all, we have 79 million blackberry subscribers out there on black rememberry os devices and that service revenue isn't going to go away. that stays intact. and we're still selling blackberry 7 devices into the market and will continue to do so, pretty strong into the entry level segments and lots of regions and we will continue to do this over the next month. so the transition period from blackberry 7 to blackberry 10 is going to be 1 1/2 to 2 years. that gives us time to really move from blackberry 7 to blackberry 10. now in blackberry 10 what we're

seeing is that services are segmenting. so we're providing new service offers to enterprises in various segments, in various combinations, and what we also do is for consumers, innovating and building new competitive services, think about bvm as one of the platforms we could leverage and we're building those new services for consumers. so we are transitioning. we're not stopping, we're not holting, we're not disrupting. we're transitioning with our consumer services towards the next generation of blackberry devices and services. >> so i just want to clarify before moving on to the device question. i believe you said that you're discounting some services already, even on blackberry 7. kind of as a marketing move to keep market share up. isn't that the case? and are we already seeing some erosion in consumer services revenue? >> what we have is always that you have a price elasticity.

either you sell devices or services. and that is just a evolution over time, if you have the services into the market. you need to constantly enhance those services, innovate those services, you need to increase in value add those services. and this is what we're doing. and i think the numbers that we reported yesterday show that we're pretty successful in doing so. i mean i think we beat expectation in many regards in our current quarter. and i'm very satisfied with those results. and i think this transition is prepared well, and it's going to be executed well. >> one more question i know becky wants to jump in here. on blackberry 10 devices it seems like you said that those will ship in the current quarter in your fiscal q4. will they be shipping in volume to the key markets in north america in q4 or might we have to wait one more quarter to see them come in volume? >> as i always said, and i maintain that position and i have good line of sight to this

nowadays is we will ship in significant volume in our fiscal quarter 4 into the u.s., and into all global markets. >> okay. thank you for joining us today. you know, we've spoken to a number of analysts over the last couple of days who say your company, basically, is riding on everything that happens with the blackberry 10. they call this a binary event. if this launch goes well, they say it's great news, the stock goes up. if it doesn't say they look out below on this entire situation. they give you a very limited window. how much time do you think you have after the launch of blackberry 10 just in terms of whether or not this launch is successful and how the street views that? >> again, as i said in my first response to john's question, i guess was, we are transitioning. this doesn't happen overnight. we still enjoy strong blackberry 7 sales in many of our regions. i think we have a certain period of time, several quarters, where we would transition from

blackberry 7 over to blackberry 10. also be aware that the portfolio of blackberry 10 is not the entire portfolio from day one. >> but you disagree with those analysts then? you think you have a much longer time frame? we had one analyst who told us this morning that walt mossberg has some control over this, too. whether or not he likes the blackberry 10. you disagree it's a short time frame? you're hoping you have several quarters? >> i don't think this is a black and white decision that is being decided in one week. and i really do appreciate his comment and also his reviews. certainly he's an icon in the industry. however we are very, very confident in blackberry 10. because we have tested it before, right? before we took it to market we showed it to bloggers, we showed it to reviewers, we showed it to our carrier partners. the excitement is very, very high. so i'm very confident that we will make that transition pretty quickly. but we will also maintain a good amount of blackberry 7 devices, and service revenues, because we will also be very strong in

asia, middle east, africa, in the entry and in the midfield level. >> thorsten i wanted to jump in here and ask about enterprise. i believe you said post-may time frame is when you expect the new enterprise server to be ready. is that one we should also expect a keyboard version of blackberry 10 devices to be available? >> so the 10 version is ready earlier. it's already in testing as we said, with 120 companies that actually have installed it, are testing it in the combination with bb 10 devices. we will roll this out commercially also in our q1 in our fiscal q1 and we're getting ready for this. and on the quality, absolutely we will be working really hard to make sure that the quality device hits the market as early as possible. the teams are engaged day and night work on that schedule, we

know that there's a lot of die-hard blackberry fans out there. i think becky is one of those and we want to serve those customers really, really well. so expect that time difference between the quality ee vice to be a few weeks, probably. >> thorsten it's andrew sorkin. real quick, apps. apps clearly in this world have become so important. will you be paying the app makers to make sure that their apps are on blackberry for those that have decided either they're not ready to devote the energy and resources to do it? >> andrew this has changed quite dynamically over the last month. remember we did the blackberry jam conferences. the blackberry 10 platform is designed to the wish list of the application developers. it is open. it has several run times. so what happens is that the sentiment about developing applications on blackberry 10 has improved dramatically. we now have 58% of all app

developers saying yes, we recommend to develop against that platform. that's an increase of 120 percentage from june. so we have a good, sound base of application developed as helping and supporting and getting us the most important. also the regional, local applications onto blackberry 10. we feel good about the quantity of applications. and we also feel good about the quality of the applications. >> very, very quickly. you guys went from having 600 million dollars in cash on hand to 2.9 billion dollars in cash. the expectation is that that is going to be spent in large part on marketing. can you give us a sense of what that's going to look like in a quarter or two from now? >> yes, i think first and foremost, i remember when i was assigned ceo that february, march, there was a lot of debate about is rim even going to make it to the launch of blackberry 10, right? being here representing my management team i think put fantastic, prudent management

together for $.9 billion, those products, and thoughts have gone away. we are there to launch blackberry 10. now we will be investing into the launch of blackberry 10. we will provide a very strong marketing and launch campaign together with our carrier partners and you know, we're looking forward to build the product, and millions of units, which also requires us investing in inventory and in materials. so yes, we will see the cash position going down in the q4, q1 time frame of rim's fiscal year. however, i do not expect that to drop below a number of about $2 billion. >> thorsten, thank you. i just think you're -- i mean you're at rim, and you're in waterloo and you don't even care. because even though you're in waterloo that doesn't even occur to you that this isn't going to work but the blackberry 10. and the first time you were on, remember i think we were at $7 and then got all the way back to $14.

you're brave. thank you. i appreciate it. and john, thank you for getting up early. are you in california, john? >> oh, yeah. >> thank you. you're doing -- you're doing god's work for us. thank you, john. coming up the final trading day before the weekend. will washington rise above the rhetoric and get a deal done? find out how traders are feeling about the fiscal cliff and beyond. here's the futures right now. they haven't gotten much worse. till to come on "squawk box," a little holiday cheer from cee lo green. >> what do you want for christmas? >> for christmas? ♪ all i need is love >> musician, producer, and star of "the voice" talks up his new holiday album and gets "squawk" into the spirit of the season. ♪ make me crazy ♪ does that make me crazy she knows the potential for making or losing money can pop up anytime. that's why she trades with the leader in mobile trading.

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welcome back, everybody. only a few trading days left in 2012. joining us is boris schlossberg. our guest hosts barry snap and roger altman are here, as well. japan had been driving things until we went over this plan "b"

not being brought to the house floor last night. how did that change the dynamic? >> you know, i think barry had it right. it's less of a fiscal cliff than a fiscal drag. i think that's the right way to describe it. i think the interesting thing as far as the currency market goes, as far as the euro goes, is i think we're starting to correlate back to the dow. as i was looking at the screen, the euro is trading 132. the dow is 13,100. i think if we slice another 100 points off the dow, probably going to slice another 100 points off the euro, as well. the reason why, i think the correlation is back is if the market perceives the fact that the u.s. economy slows down because they can't get a deal done in the fiscal cliff, that's going to affect global economics. europe's r is contingent on very healthy u.s. demand. if we don't have that, we take everybody else down with us. >> let me ask you, i've been trying to figure that out with regard to bonds and how it's been playing out in treasuries, too. your idea is if things slow down and this is really bad news, this is bad news for the globe but worse news for everybody else, and the dollar and the

treasury are still seen as safe havens, is that true? >> yes. >> even though we're causing all of this and washington can't get its act together we are still seeing despite what ratings agencies say as the safe haven out of all of this? >> right. because on a relative basis we're still the deepest, most liquid market in the world. more importantly it's an issue of risk trade. the market is buying up europe now on the assumption europe is going to recover into q1, q2. the only way they can recover because they're an export driven continent is selling to us. the whole scenario blows up, that's why it's so important to make sure we negotiate some sort of a deal going forward. >> boris -- >> greater sensitivity is in asia, right? china's got this fledgling recovery going. if you look at the trade numbers, they're extremely weak into the european bloc. they're okay into the u.s. bloc. but u.s. demand deteriorates, then there's no chinese recovery. and then the bid for commodities and all the demand related to that gets -- >> right. you said it, barry, because it's

been signaling that in the currency market because the aussie dollar which is the proxy for the risk trade for asia has been very weak relative to the eu euro. that's signaling the market is very concerned about that going forward. >> copper, as well, i think is another indicator. >> you know, roger, i hear all of this, and you're somebody who knows what happens behind the scenes in washington. you know how these thingsz work. when you see how this is setting up at this point, what do you really see as the most likely scenario between now and the end of the year and then into january? >> first of all, i don't think anybody wins if we go over the fiscal cliff. i don't. i doubt we would stay over the cliff so to speak for more than very, very short periods. i think the financial market pressure, public pressure, overall pressure would not allow that. i don't think anybody wins by virtue of going over the cliff. the idea that somehow there's a machiavellian plot to give us over the cliff because of some political gain associated with that, i don't believe that.

now, as i said earlier, it's now going to shift back to the president, and in effect the democrats and the senate. i think they're going to pass a bill over the next few days, although this is just my own conjecture, and we'll see whether the house can do something on a bipartisan basis or not. >> do they pass something that they think is something that would actually win votes in the house, or do they look at this and say forget it, we're doing our thing and running with the bill that we know? >> it wouldn't be revenue, though, because the house has to do revenue bills, right? they would be able to structure it in a way that wasn't a revenue bill? >> i'm not a parliamentary expert. but. senate can certainly pass a bill here. it might be nonbinding. >> nonbinding? >> in terms of revenue. but they can pass a bill. my own guess, i'm might be way wrong here, is they would rather pass a bill that they think has a shot in the house than pass a bill just for rhetoric. i just don't buy the idea that anybody wins if we go over the cliff. >> and the clock is ticking. >> one of the things, if i can come back to it, i hope the house republicans will take the

spending cuts that the president proposed. a lot of people think, you know, "the wall street journal's" editorial and so forth this morning, that there really weren't any serious spending cuts here. it's just not the case. if you look at the outcry on the left of the democratic party you can see there are serious spending cuts here. chain cpi is not an easy give. the president talked about 200 of that. 400 billion of health related spending cuts that really means medicare. 200 billion of additional discretionary cuts. the whole package is a trillion. the bill they failed to pass yesterday in the house, plan "b," had no spending cuts in it to speak of. >> because they were going to take the stuff that was over the cliff. we're going to continue this conversation in just a minute. >> coming up we're going to try to rise above in the next hour. we've got austan goolsbee, and a musician that i think you know very, very well. we'll try to surprise you with that when "squawk" returns. [ male announcer ] how do you trade?

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all right roger, we want to thank you very much for joining us this morning. we have to convince you to come out here for two hours because i have hours more of questions for you. happy holidays. >> thank you very much. >> when we come back austan goolsbee on the end of the world and the fiscal cliff. one and the same, perhaps. to the best vacation spot on earth. (all) the gulf! it doesn't matter which of our great states folks visit.

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so much for plan "b." speaker boehner failing to muster support for the gop tax plan. is a compromise deal politically possible? we'll ask president obama's former economic adviser austan goolsbee. and house minority whip steny hoyer. >> a read on retail. ahead of the final shopping weekend before christmas.

>> if it wouldn't be too much i'd like to get something for you, clark. something really nice. >> the season's biggest winners and losers. plus, cee lo green stops by to bring a little holiday clear from his new christmas album. ♪ >> the third hour of "squawk box" starts right now. >> welcome back to "squawk box," everybody. here on cnbc where we are first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. it is december 21st. the end of the world it has come and gone and we're still here and we're very pleased about all of that. our guest shoes barry knapp, barclays head of u.s. equities strategy. first more headlines. >> take a look at u.s. equity

futures right now. it is not a great situation. an attempt by house speaker john boehner to pass a so-called plan "b" tax bill has failed and you're seeing the effects of that in the futures right there. dow looks like it will open down about 140 points. the measures would have kept current tax rates for those making less than $1 million a year. failed to gain enough gop support so it never even made it to the house floor. boehner will now hold a news conference this morning at 10:00 a.m. eastern time presumably to discuss the next steps. we don't know exactly what those next steps will be. steve liesman might. he joins us now with the latest. >> but, but -- >> the market's not down because it didn't pass. because it was never going anywhere anyway. it's down because what it says about the negotiation. >> just total dysfunction. i think that's exactly right. that's what my report really says. both the white house and the gop is that no one expected plan "b" to fail. >> right. >> so what i could tell from being on the phone last night is

that neither side at the moment has a game plan for the post-plan "b" failure world. late afternoon yesterday, white house officials were trying to game out the world after plan "b" passed. and i had some discussions with the folks about where they might go from here. asked what the next steps were after plan "b" failed later in the evening, a white house source only responded, quote, it is all a mystery. it seems now that the president has changed his goal to only a tax deal for those making $250,000 and below. which by the way was the deal, was what he wanted before he offered this deal on monday. here's what the president's spokesman is saying. the main priority is to ensure that taxes don't go up on 98% of americans and 97% of small businesses in just a few short days. that sounds to me like they're rolling back, if they could just get this one piece of the tax deal before the new year. meanwhile a gop source familiar with the vote explains to me why he thought the vote failed, blaming democrats. quote the veto threat and opposition from the white house and the senate majority leader made some members feel like they

were taking a risky vote for no reason. even though the bill did not actually include a tax hike, now the president and the senate majority leader must found a solution to this crisis. so, the gop position right now is that the democrats can solve this, i think, on their own. what is clear is that neither the principles, not boehner or the white house, wanted or expected to be here at this point in the negotiations. boehner clearly thought he would have a vote under his belt giving him strength to negotiate. the white house thought they were in something of a back and forth, haggling on this process where the house where their offer on hon day would be countered with another offer on tuesday. what i learned on tuesday is that they had stopped exchanging documents. they had stopped doing it and the white house had said that their offer on monday was not their best and final offer. so plan "b" and now its failure to pass, have to say, makes it more likely we go over the cliff in some form. we knew there was going to be some drama here guys. i don't think this is where we thought it was going to come. >> what are the choices?

i mean we have gone through the per mutations with others this morning. how do you see it? >> i think that the president has laid down the marker, that there will be some increase in taxes on the wealthy. maybe joe could help me out with the meaning of last night's plan "b" vote is that there will be no increase of taxes on the wealthy. is that right or am i wrong? >> i think you nailed it. why would these guys, it will be really easy after the first for these guys to vote for -- >> let it expire. >> tax cut on 98% of the people. why throw away a vote when harry reid wasn't even going to bring it up. you said it in your piece. >> why be on the record as voting for it. >> i have heard another thing, a little more -- >> the other thing is they want some serious cuts to go along with it. you're going to have to do even more cutting than is already on the table. >> i will say that the president has something of a plan and when you ask them for detail on the plan they refer you to the 60-page document that has

savings plans. but when i ask the gop for their spending plan, they kind o owledge they don't have one. so, it's a little bit disingenuous i think on both sides. what there was, i understand, becky, is there were secret documents going back and forth that had real spending plans in them. that stopped on tuesday. and as i understand it, no reporter has really seen those documents going back and forth. >> do you think republicans would vote down after the 1st, lowering taxes on 98%? >> no. >> i don't either. >> you're the calmest guy at the table. you're cool on this. we go over the cliff -- >> i think they lower -- >> even go to 400. >> he gets his 250. >> but why, joe, i thought the democrats had -- >> i thought the democrats had a trillion dollars of tax cuts, of spending cuts on the table. now they're going to get nothing. is that what the gop really wants?

>> the political gambit here was let's take that populism around that marginal tax rate, taxing the rich off the table. there was sort of a 400, 500,000 bid/ask between the president and speaker boehner reportedly. you settle that issue, and then you have expedited language to do pro-growth tax or tax reform by the spring. and entitlement reform by the summer. >> but wait a second. >> and you -- >> would the president actually do a deal that allowed it to come right back to the debt ceiling? six weeks later. >> that would have made -- >> we're doing this all to the now. meaning, i think you could be doing this in february. right? we're going to be doing debt ceiling and fiscal cliff at the same time. >> a single deal. >> and let's just point out what roger altman was saying before he left at the break, something we reported geithner is concerned about, all of this leads to a potential downgrade. in that remember what the rating agencies were downgrading. not our financial situation but

our political dysfunctionality. the inability to come to a deal and this feeds right into that. >> roger off camera said eventually it could tarnish the president, not just republicans. i think that like patty murray and others that don't think it's going -- that we can put all the obstructions -- >> whether the obstruction in half but i don't know. i don't know. >> i am -- >> it is clear to me that my contacts in the white house do not want to go over the cliff. they are afraid of it. they don't want to be there. and then there's what dan greenhouse said is you think you're over the cliff, you go into recession and you snap right back when you make a deal. he doesn't think the economy is strong enough to have that bounce back. >> what if you lost the house -- the president won back the house in two years because of this? couldn't the last two years he could do whatever -- >> i think the president -- >> i don't think they're playing for the next two years. >> i think the president has an agenda, though. this is not it. >> we join the european union, we adopt universal health care with single payer, we do climate

change. we do cradle to grave -- >> the euro is nice and strong. 1.31. >> it's a global economy anyway. >> right. >> he loves -- >> i don't do political chess for a living. i do the math of the political chess. >> i'm doing the chess. >> you have to think about this. >> check mate. what's check mate? before that. before that. you got to go. but i want to know how i asked roger whether he had talked to people around the white house that do think eventually it could hurt the president. he thought it would. i don't think they think it's going to hurt the president. >> i'm pretty sure the people i talked to do not. >> barry what happens with the market reaction? downgrade from the debt agencies? last time around it didn't seem to have a huge market impact. >> the back end of the treasury curve steepened california maltically. there's a history of that. it happened during the government shutdown in early '96, so there will be disruption in the markets for sure. the dollar spikes higher, and probably risky asset sell-off.

credit spreads widen, stocks go down. you know, whether the market gets carried away with a downgrade or not -- >> let's get austan in. bring in another voice. austan goolsbee is professor of economics at the university of chicago school of business. barry knapp is still here. austan, did you hear steve's report, he was talking about whether the white house really wanted to go over the cliff or not. you've heard all the rhetoric. what do you think? do you think we go over the cliff now at this point? >> yeah, look, three months ago on this very show i called it to the day. i said i don't see how they're going to get around the fact that it's the same people who were there last summer and it felt very similar to the situation last summer. i think the basic situation is this. last summer, not this past -- summer much '11, there was a grand bargain to be had. and the tea party wouldn't go for it, and the president now won the election, so the grand

bargain is going to be less favorable to them now than it was in the summer of '11. and they still can't get past that. so eventually they're going to have to decide they're either doing a grand bargain or they're not. and when we do the grand bargain i think it's going to be after we've gone off the fiscal cliff. they've got the fiscal bungee jump, as the where we jump off, bounce back, hope the rope doesn't snap. >> both sides have that strategy now austan? >> i think basically they're going to make one last-ditch attempt to see if they can come up with some agreement. i don't see how you can look at the events of last night and think they're going to vote for a grand bargain. >> i agree with the polls. i think that the republicans are going to be the ones that get tarnished more. you think the president has any downside if we do it that way? >> the president's only downside is i think it will hurt the economy for a short period where people are totally up in the air

of what's going to happen. overall in the world of politics it's going to make the republicans look bad. they already look bad. they look like, if you got stuck in the movie line behind joe, and joe won't buy a ticket because he keeps saying, when i was a kid i would go to the movies for a nickel. this costs $10. get out of the way. >> it was not a nickel. come on! a pack of gum was. but -- >> question for you on this was the grand bargain of the summer of 2011, was that going to stabilize our debt? >> yeah, i think it would have. >> it won't totally sorted out. it was very elliptical because nobody wanted to make an expleasive offer. they thought the other side would go to the press. but it would have been pretty much on the order of what simpson-bowles had and i think it would have stabilized debt-to-gdp. >> austin have you heard anyone say this would be a good way to win back the house in two years? >> i haven't. but i have no doubt that somebody's going to, if this

happens, then the conspiracy theorists will come out that that was the design all along. whatever happens -- >> you know -- >> i was already out with that theory. >> you know we need rog off here. they go 20 moves ahead, and then you win back the house and join the eu. did you hear that? did you like that? >> i heard that. all i know is you've got steve saying he's captain of the chess club. what happened -- where are we? what are we doing here? >> if there's going to be a rabbit pulled out of this hat, how would it happen? >> a dead rabbit pulled out of a hat. a rabbit is not getting pulled out of a hat. >> oh, no fatal attraction. out of the boiling pot. >> that's right. >> the death march. >> wonderful image. >> the number is 3 trillion. we don't need four. >> we need -- on the august 2010

baseline that's the number that the cbo tells me we need to get down to 3% of gdp. >> we'll never collect that amount of revenue. you need five to start reducing the amount of debt, four as a baseline. we've done a lot of work on this. >> the difference between you has to do with what you think the growth rate is going to be. if the growth rate returns back to normal, then you need three. if the growth rate stays 2%, then you need more than that. >> woo we don't see any real prospect of that changing in the near term. >> you're talking about reducing. >> seem aing four to stabilize the and five to reduce it is our world. >> in the august 2010 baseline? >> yes. >> i'll have to redo it. >> both sides austin. both are willing to play their hands out here. it's -- i mean i know we want to rise above but it's going to be fascinating to watch as both sides play this hand, don't you think? i think you need to look out further than 20. >> i don't think anybody knows

what cards they have in their hand anymore. >> they're pieces. they're not cards. >> but actually -- >> look, i don't want to -- >> we need the president of a literary club here. >> i don't want to blanket everyone with the same brush. >> lead a horse to water -- >> it's not going to be a walk in the cake. austan i wish we had more time. you really are speaking the truth today. and i like it. we're on the same page. anyway, thanks. >> chaos -- -- >> what? >> chaos is going to hit the fan. all right, you're up quickie. >> when we come back, the retail rush is almost over. we're going to talk winners and losers. in the meantime take another look at the u.s. equity futures. again the disappointment as we assume that there is less of a chance that we'll reach some sort of a solution for the fiscal cliff before year end. right now dow futures down by about 141 points. s&p futures down by about 15 1/2.

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welcome back to "squawk box." the futures setting up a day that looks like we're going to have a lot of red arrows. all of this as the fiscal cliff discussion continues. and worries now that we might be really going off of it now. >> i think our meter -- we don't use it on this show, do we? the fiscal cliff meter. >> get to zero or something. thab they're ready for it to go to a quarter. but it definitely has gone -- >> going in the wrong direction. in the meantime let's check out shares of wall green there on your screen. the drug chain earning 58 cents per chair, including certain items for its latest quarter. that is well below estimates of 07 cents a share. the company says nonoperational factors were a key drag on profits. and the underlying business is

strong. i'm surprised they have any problems. but nonoperational. i can't feel bad myself. >> what are you buying there? >> this past week a lot of pedialyte. >> pedialyte? >> a lot of pedialyte for the so sorkin family. >> does that help with digestive things? >> gatorade? >> an awful lot of fluids. >> and we got the sound effects to prove it. >> that's always ready to go. >> just like all in the family. >> that was in the background. >> the christmas countdown continues with three shopping days left until christmas. who are the big winners and losers? joining us to talk more about it is jpmorgan senior analyst matthew boss. he covers broad lines, apparel and footwear. if we are talking about how to say we've done for this whole holiday season, barry was talking earlier about how some of the reports coming in are not good. how would you rate this season overall? >> i think it's been pretty dire

as the dates started off in november with the hurricane and some disruption there. as we moved into december we had a lot more tepid weather. you know, much warmer than expected. now getting into this last week here i think this political instability today is not going to be a good thing weighing on the consumer's minds as we head into supersaturday tomorrow. we do need a big push here at the end for supersaturday, and early next week. >> you think we're going to miss the nrf's estimates for how big of a gain we see in total sales? >> yeah. i mean, i think there's a chance that, you know, there's a holiday season as we think about it could come in weaker as a whole. i'm not so sure any retailer out there, when you put together where they expect it to be at the beginning versus where they may end up, i'm not so sure that there's going to be any winners versus initial expectation. i think when it's all said and done on a relative basis.

macy's may fare the best. i think there's going to be definite losers, i put jcpenney and kohl's in that pocket. >> the concern there has been an operational one on top of the disappointing consumer? >> for jcpenney, no question operational issues there, more company specific. kohl's, i think they're suffering from a lack of a real core consumer, and an offering that's attracting staple traffic into the box. the question with jcpenney is into next year, when does it stabilize and can it stabilize? we think it's a back half of '13 into 2014 story and potentially even pished out to 2015. but you know, taking a step back i think for this holiday season, it's not -- i'm not throwing in the towel yet but this morning's events, and how i think that the media impact could weigh on the consumer over this really important weekend i think it's

really worth closely monitoring here. >> matthew, thank you very much. we'll talk to you again soon. >> coming up, we'll get personal income and spending numbers for 8:30 a.m. and talk debt negotiations with steny, house minority whip and former leader hoyer. nespresso. where i never have to compromise on anything. ♪ where just one touch creates the perfect coffee. where every cappuccino and latte is only made with fresh milk. and where the staff is exceptionally friendly. ♪ nespresso. what else? can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery.

and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade.

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from personal income and spending numbers for november. first here's phil lebeau with what to expect from the auto sector in the new year. >> in 2013 look for auto sales in the u.s. to rev up to their highest level since 2007. most on wall street believe the sales pace for the year will surge above 15 million vehicles. a healthy increase of a 10% over the 2012 sales rate. the average car on the road at least ten years old, the need and desire of americans to replace their old car with a new one will be strong. in 2013 look for the truck market to pick up. as the housing market recovers, look for contractors to replace their aging work vehicles with a fresh fleet of pickup trucks. finally 2013 is the year tesla believes it will put to rest all doubts about whether it can become a mass market automaker. the company is on track to be cash flow positive in 2013.

and that it will meet its goal of delivering 20,000 model-s sedans next year. if that happens, focus for tesla and its investors will be the development of the company's next vehicle. the model-x.

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welcome back to "squawk." a bit of news on the bill accman herbalife fight. herbalife is announcing it's going to host an analyst day to respond in detail to what it calls the quote distorted, outdated and inaccurate information. i interviewed bill ackman yesterday and he made a real case that this was a deceptive, fraudulent, company that was a ponzi scheme. >> you didn't even talk about whether any of the stuff actually worked. >> we didn't even talk about that. it was almost like a public service message he was trying to deliver. almost less to do with an investment thesis but some of the other things. >> we've got to go. >> rick for the personal income numbers. >> income up 0.6%. spending up 0.4%. you know these numbers at least pass muster with regard to expectations. we're looking for up from both.

the revisions were actually absolutely positive from unchanged on the income originally released up 0.1, and down 0.2 to down only 0.1. durable goods orders up 0.7. up 0.7 is also better than expected. and last month, was revised from unchanged up 1.1%. so these are pretty solid. if you take extransportation that was up 1.6. from my vantage point, don't see anything on the numbers that's horrible. i don't see the durable goods orders nondefense exaircraft for business capital spending but maybe steve will pull that one out. all in all, you know, we're down 181. it's a weekend. christmas is around the corner. i think a lot of politicians are going to find some unique gifts under their trees this year. >> cap goods orders were at

recessionary levels. they came in at plus 2.7 and revised from 1.7 to 3.. pretty sharp snap back from 25% annualized decline in the third quarter. >> absolutely. i'm very surprised that we didn't see more on the market side here bringing this down. but of course, i think we're going to have to wait until we get in full-blown post futures kind of new york session. given the holiday market this could be the last hurrah. back to you guys. >> thanks, rick. house speaker boehner failing to win support for a plan "b" tax plan. is a compromise deal possible or are we doomed to go over the fiscal cliff? joining us now is democratic congressman steny hoyer. he's the house minority whip. we also have our guest host barry knapp with us. leader, number one, congratulations for being alive with the rest of us today. it's nice that, you know -- i hope we're not messing up like which time zone it was supposed to happen in. because, you know, i've already --

>> 11:00 a.m. >> i'm trying to figure out where to start. i want to just -- i want to start with this. let's say we go through the cliff, rates go up on everyone. if the president and you guys were in the house, maybe you could do this. if there was a bill to lower taxes on everyone under 250 do you think the republicans would be able to vote for it after january 1st? because it would be a tax cut at that point? >> i think the answer to that is certainly a significant number of them would. and we would pass it. but, we still need to focus on not going over the cliff. not going over the cliff is i think a priority for us. that's not good for the country. not good for the economy. not good for the confidence of the american people. >> is there any reason to be optimistic at this point, steny? sooner or later, i don't know, don't you ever just say, you know what, seeing yesterday, aren't there some guys in the house, the tea party guys, that aren't going to go for just about any kind of compromise?

>> i think that's accurate. and not only that's not only accurate, we saw that last night. john boehner could not get his own bill through with a republican majority. but, what john boehner, i think, can do, is come to an agreement with the president, and get half of his people or a little more than half of his people, a significant number of democrats and republicans coming to the in a bipartisan fashion saying we're not going to go over the cliff, we're not going to let middle income working americans have a tax increase. we're going to make sure the economy remains stable, and the confidence of the american people is not undermined. i think that's an objective that we need to keep focused on. i'm sorry that we've left town. obviously i'm here, and most of the democratic leadership is here. the fact is we can still use these days -- >> steny, you can drive home. steny, we know that. we know that. don't -- >> nancy pelosi can't drive home. she's in california.

i got you. >> she's got a big jet -- oh, no she doesn't have that anymore. i'm kidding. i'm kidding. >> look, this is serious. >> i know it is. >> this is a serious matter and john boehner has to come to grips with the fact he can't do it in a partisan fashion through the house of representatives. that was demonstrated very dramatically last night. and i'm glad it was demonstrated because it ought to get the attention of republicans and democrats, and the american people that if we're going to go forward we have to do so in a bipartisan basis. the house of representatives leadership has not been good at moving ahead on bipartisan basis. but america expects us to do that. we need to do that. and i've told john boehner that the leader and i will work on getting sufficient number of democrats to join with sufficient number of republicans to pass a balanced, bipartisan agreement that the president will sign, the senate will pass. you can't do it on a partisan basis. john boehner showed that last night. and just walking away and saying, now it's up to the president, and up to the senate,

is not a helpful stance. we all are in this together. america expects us not to go over this cliff, and to work together to avoid that. and we need to do that. >> leader hoyer, i saw the poll last night and made me think this is bad news for the republicans, they can't control their caucus but it's also bad news for the white house and for everyone else in washington because it means all of the talk that we had to this point where speaker boehner was coming closer to some sort of a solution, it seemed like, with the president, we don't know if we can trust any of those deals at this point, either. i mean, did you think that this is a worse situation or make it much less likely that we get a deal before the end of the year? >> actually, i hope the opposite is true. and let me tell you why i think that. i think that all along mr. boehner is saying, well, the white house won't crops. the reality has been that mr. boehner has come back to his caucus, and obviously they would not support what we believe is a balanced deal. the president said 400,000. i don't agree with that. i think 250,000 is the

appropriate figure for now, in january 2013. but, whether i agree with that or not, the president was trying to get to a compromise. boehner knew full well, if you can't get a million through, obviously, which we saw last night, 400,000 would have been impossible for him to get a majority of his -- 218. so now what john boehner -- >> does it mean john boehner has to give up the leadership in order to get some sort of deal? >> no, i hope john boehner doesn't give up the leadership, frankly. i think john boehner sincerely wants to get to a deal to avoid the cliff, and understands it's got to be on a bipartisan basis. the problem john boehner has is, his conference has demonstrated for the last two years, not just last night, that they're not too interested in bipartisan and that's unfortunate. >> is there somebody else in the party beyond boehner that could do this better that has either some leadership skill or relationships or something to make this negotiation work? >> look, i don't want to

speculate on whether there's somebody in their party to do that. i think john boehner can do it. if he comes to grips with the fact that he's going to have to take less than 218 in his party. in other words less than majority of majority. work with the president, work with democrats in the house of representatives, and in the united states, and get this done. we've had election. majority still is in the senate. newt gingrich said some years ago in 1998, perfectionist caucus, meaning his republican hard liners, and the american people elected democratic president, in that case bill clinton, democrats and republicans in the senate who don't agree and the american people expect us to make this government work. they still expect that and i think john boehner has now demonstrated in his own party that the only way he can do it, the only way we can do it is in a bipartisan basis. >> what do you think he's going to say at 10:00? any idea? >> i have no idea.

i have last night he said, well, now the responsibility son somebody else. that's not true. he's still the speaker of the house, and this congress. he has a responsibility. i have a responsibility. we all have a responsibility. the president has a responsibility and republicans and democrats in the senate have a responsibility. we should not go over the cliff. we should not raise taxes. we should not disrupt this economy. we need to move forward in a bipartisan way. >> leader hoyer you and i met about a year ago during the whole joint super committee select committee process. and you were, you know, earnestly concerned about entitlements, and growth over time. do you think we were making serious progress during these negotiations on that front, and is your side of the aisle actually prepared to do what you think we need to do in order to stabilize debt for your grandchildren, as you put it? >> both leader pelosi and i have said, the president will sign off on a deal, and boehner will sign off on a deal. we will work with john boehner to get the votes in the house of

representatives to make sure that passes. it will have some things in there that democrats won't like. it will have some things in there republicans won't like. and frankly they'll have things in there that one segment of america or the other doesn't like. but i think that all of us will get confidence and see an economy that will be stimulated and will grow as a result of an agreement i think that's our objective. the answer is yes, i'm still prepared to do that. unfortunately, let me tell you what i think happened on the super committee. >> not supposed to call it that, by the way, just go back to select committee. >> okay, the select committee. it was not that super. but let me tell you what i think the problem there was. that we can't let happen. that is that the adverse consequence, that is the sequester, was astranged from failure. in other words, when the super committee failed on november 25th to come out with a proposed on the 1.2 trillion reduction,

balance of revenues, and cuts, the adverse consequence didn't happen for another 13 months. so that they could rational, well, surely we'll work it out. surely we're here 13 months later and we haven't worked it out. whatever we do, the adverse consequences, the consequences of not having a successful solution, needs to be immediate. so that, as we work on it, we will be compelled to get to yes. unfortunately -- i say unfortunately. i really don't believe that. i think the failure last night, hopefully, will educate the american people, and give boehner the opportunity to say, look, as newt gingrich did in 199, america expects us to work together successfully. >> leader, let's say that the president gave some more, say he wants to do something bipartisan, gives a little more on spending and let's say he goes to 500. i don't know you like it.

would you support it, if you could get the house on board, they said okay i'll do this because there's nor spending and we'll go 500 up to 39.6 will you be okay with that? you can have 39.6 january 1st. you can definitely get it january 1st and then lower everything else. that might be a better path for you. or would you go to 500? >> let me say, i'm prepared to support, as i've said, a balanced, fiscally effective solution. 500 or 400, or 250 -- >> you know how hard it's going to be to get these other guys to do it. so would it have to be something with more spending? it sounds like we're talking about chasing windmills. >> look, i think we have a bowles-simpson. nobody is for all the specifics of bowles-simpson. bowles-simpson has given us the model of how you need to get to where we need to go. >> i think you said you would go for 500.

>> the answer is, well, yes, but i'm not for 500. >> but this is an area in the congress you have differences of opinion. americans understand that democracy is compromise. democracy is coming to the and trying to make compatible, different points of view. so 500 is not mine. but what you saw last night was zero is the answer to a large number of republicans. >> right. >> which is why john boehner couldn't get any kind of consensus. we need to get the consensus. >> all right. leader hoyer, thanks. appreciate it. >> you bet. >> see you later. >> okay. >> coming up, we've got a very cool guest coming up. you know him as one half of musical group, you know him from "the voice" on nbc. if you listened to the radio the last few years you know his song "forget you." cee lo green is going to be joining us right after the break. stamps.com is the best.

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welcome back to "squawk box" everyone. dow futures down by about 150 points. s&p futures down by 16.5 points. again, all of this about what's happening in washington, and we will continue to watch today. >> i've been looking forward to this next interview all morning. we're counting down to christmas with one of the biggest entertainers in the music industry. cee lo green, singer, musician, and former vocal coach on "the voice." not former. he's coming back to "the voice".

he jones us this morning. you are at the nasdaq, cee lo. what are you doing at the nasdaq? >> good morning, good morning. how are you guys doing? >> we're doing okay. what are you doing, though, this morning. >> i'm up talking to you and talking to the world. you know, it's a cold and drizzly day here in new york city. but still nice to be alive. >> you got this e-diets logo behind you at the nasdaq and you're going on a big diet from what i understand. >> yeah. you know, part of my new year's resolution is to become more healthy. so e-diets has kind of reached out to me, in hopes of a partnership and we've been able to forge very formally and quickly and officially, as, you know, as we speak, and so i'm here representing both of those brands. and a newly formed union. >> so what's the goal? how much are we going to lose? >> i think i could, if i'm effective enough i could lose about 50 pounds. that's what i'd like to do.

>> now e-diets bring you food to your home? how does it work? >> you have to understand. like there's a misconception. being overweight is often associated with overeating. but sometimes, you know, it can come from not eating enough. so that's why you need to eat the proper portion throughout the day. so you have to schedule your eating the same day you schedule itinerary and how you go about your day-to-day base. >> i'm assuming hard for you, though, as a musician who is on the road all the time. >> you're absolutely right. it's very hard to remain consistent doing what i do for a living. the e-diets is making it more convenient for me. >> here's a business question for you. relates to the music business, is there money still in recording albums, even with the digital, and everything else? because it seems to me that those who have become the most successful, i think about people like you, you have on "the voice," you have deals with e-diets, you do live entertainment, that's really where the bulk of the money is

coming from these days. >> well, you know, you can definitely be the jack of all trades and the master of one, and i start, i begin and end with music. but, you know, there's always infinite possibility in intellectual property. you know, which is music. but yes, it's become a singles game, and then an albums game. but it's always an artist's game in my opinion. and so therefore, i'm very optimistic about music at large. and so i would like to believe that, you know, that there's still a demographic and an audience that appreciates it. >> cee lo, i just want to say i'm a huge fan. i'm really excited to have you here. and i started to have some palpitations when i heard you weren't coming back for season four. this is just a hiatus, you're coming back for season five, right? >> yes, to all of my many fans and extended family, i'd like to wish everybody a happy holidays and yes, rest assured i'll be back for season five, "the voice." wouldn't have it any other way. >> this doesn't have anything to do with nicolas david losing out to cassidy pope, does it? >> no, no, no.

not at all. this was kind of set into motion beforehand. but yes, it was very disappointing for my guy not to win. i still think he deserved it. >> cee lo on that soft drink commercial where there are pictures of you as a little kid, how did they know you were going to be famous shooting those shots? >> i don't think anybody knew. but it's been a pleasant surprise for everyone, including me. >> good. good answer. >> okay. thank you very much, cee lo. coming up next, don't go anywhere for one second. we're going to be checking in with jim cramer at the new york stock exchange. but before we go to break, cee lo, you're going to get us in the holiday spirit. play us out who break. >> please, please? >> oh, yeah. >> sing to us. see. ♪ hey-go, mistletoe ♪ i'm going to get to know you better ♪ ♪ this christmas and as we trim the tree, how much fun it's going to be the together ♪ merry christmas, everybody.

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welcome back, everybody. let's get down to the new york stock exchange. jim cramer joins us right now. what does this mean? everything that happened in washington over the last 12 hours or so, boehner coming at

10:00 a.m. how is the market going to react to all this? >> i think the market is showing that there's no deal. boehner can say whatever he wants, it doesn't really matter. but i think there could be a super bowl solution. that's what i'm looking at. people have a paycheck every two weeks, are going to know how bad it is, every month is going to know how bad it is. it's a february solution. if we sell off each time, this is not t.a.r.p., between ones and twos. this is just business as usual. you go down a couple percent. >> that's what we've been talking to barry about, too, the idea that there is going to be more of a chinese water torture drip, not necessarily a huge knee-jerk reaction in the market like t.a.r.p. >> i think that's a good analysis. i think they hate each other. there's no consensus. it's all -- look, it's a big joke. it's terrible to say that, because these are our leaders. but if we're just going to trade every day off of washington, then just go home. come back february 2nd when we

get a super bowl solution. otherwise turn it off. if you focus on washington, you'll miss the nike, you'll miss the takeovers. people sell because they got bullish. people at the last minute believed there was a deal. there's really no hope for a deal. maybe boehner says something, but grover norquist says nothing. and grover norquist will not allow the republicans to get away from their pledge until after the taxes are increased and then vote for a decrease. >> the president would get 250, that wouldn't be that bad, jim. steny just said he didn't want to go to 400, or even 500. you get 250, get it on 39.6, you don't have to go to 38 or 37 or whatever. you introduce a bill, lower it on everyone else. is that really -- if you do it on january 2nd -- >> can't do it that fast. because they can't. >> but it's not the end of the world. the end of the world didn't happen. we already had our chance. unless there's a zombie somewhere, the first one that we don't know about.

>> it would be putting way too much emphasis on them being leaders. we have to rise above it. we shouldn't have even tried it, because it's clear they can't. i think january 2nd, no, you haven't seen your paycheck by february 10th. you have to wait until everybody sees their paycheck and then there will be activity. >> but the president could get 39.6 for 250, which that's not the worst thing in the world for him. >> no. and i think you're exactly right, it's not the worst thing in the world. people say, what are you going to sell today? will i sell wells fargo? no, there's no wells fargo. you sell citi, i'll sell jpmorgan. if that's the way you want to did it, fine. >> happy holidays, jim. we've got barry knapp, our guest host this morning. we give him the last word when squawk returns. [ male announcer ] i've seen incredible things.

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